Hi, I'm one of the guys, who sent $20 to learn about his secret banking system. Fortunately, I haven't spent any more time or money other than reading his letter. What he gives is instructions on how to make yourself look rich, go into banks and systematically borrow money to raise your credit worthiness to a point where you can borrow enough money to buy personally held mortgages from people who are desperate to sell them.
Once you have some notes your ticket to riches is assured. There are some flaws to this 'Secret Banking System.'
1) You have to build an illusion of credit worthiness to get banks to lend you the money by opening several checking accounts and writing bogus checks from one account and depositing it in another. This is supposed to make you look good to the bankers. If in the early stages of this scheme, a banker calls your bluff or does any real checking on you, you are toast before you get started.
2) If you are successful with getting the banks to go along with your scheme, then when you get enough money in loans together, you start buying personally held mortgages or notes. This is where his system gets really bad.investing in notes by itself is a great way to build wealth. However, Palmer's system grossly oversimplifies it. He says to put out a classified add offering to buy mortgages and people, who are desperate to sell you their mortgage, will ring your phone off the hook.
You offer to buy the note at 65% of the face value. First of all, many people holding notes don't know that they can sell them. It takes more concerted marketing to find potential sellers. It also doesn't take into effect the details about the note, its seasoning or its risk factors. Buying notes also requires a certain degree of negotiating because you have to convince a seller why its worth more to him to sell the note at a 65% discount now rather than waiting for all the payments to be made.
In short, this system is way over-simplified in contrast with the realities of buying and selling personally held mortgages.
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